RRSPs are utilizing Reg. 4900(1)(i)(ii) to facilitate real estate investments by their annuitants

The following arrangement is now being marketed as a structure for RRSP funds to be invested in real estate:

1. Pubco, whose shares listed on a designated stock exchange in Canada, subscribes for voting preferred shares of a Canadian private corporation (Realtyco) so that it is controlled by Pubco.
2. The RRSPs of various investors subscribe for interest-bearing debentures of Realtyco, with Realtyco using such funds to acquire real estate.
3. Such investors subscribe for the common shares of Realtyco outside of their RRSPs.

Under Reg. 4900(1)(i)(ii), debentures issued by a corporation controlled by a corporation whose shares are listed on a designated stock exchange in Canada are qualified investments for most registered plans including RRSPs.

If Pubco ceases to control Realtyco, or its shares are delisted, the debentures will become non-qualified investments.

Neal Armstrong. Summary of Chris Lang and Keaton Buchberger, “The RRSP Trap: A Cautionary Illustration of the Risk of Non-Conventional Investment Structures,” Tax for the Owner-Manager, Vol. 25, No. 2, April 2025, p. 7 under Reg. 4900(1)(i)(ii).